United Wins Round On Japan

June 11, 1988|By Carol Jouzaitis.

United Airlines scored a victory Friday in its effort to retain the right to fly between Seattle and Tokyo, a route coveted by two of its major rivals. A Transportation Department administrative law judge recommended that United keep the route and that applications by American Airlines and Continental Airlines to take it over be rejected.

The recommendation by Judge Burton Kolko will be reviewed by department officials before a final decision is made by Transportation Secretary James Burnley.

Burnley has 90 days to rule in the case. President Reagan then would have 60 days to veto Burnley`s decision for defense considerations.

United has operated the route since 1983, and the challenges by American and Continental sparked a bitter fight.

American officials said Friday that the carrier would continue pressing its case. American had argued that United has monopolized U.S. flights to Tokyo from all three West Coast gateways, Seattle, San Francisco and Los Angeles.

American`s Chairman Robert Crandall said he deplored the judge`s recommendation as ``unfair to airlines seeking to compete with incumbent carrier in the Pacific.``

He criticized the law judge for giving too much weight to United`s authorities to fly beyond Japan to other points in Asia.

``We simply cannot understand why the law judge would recommend leaving all three West Coast gateways in the hands of a single airline,`` Crandall said. ``No other carrier other than United or Northwest (Airlines) can ever hope to be awarded routes to and from Japan.``

United Chairman Stephen Wolf applauded the decision and said he was confident the department would rule in United`s favor. United would move ahead with plans to enlarge its presence in Seattle, he said.

A $20 million expansion at Seattle was delayed for more than a year pending a decision on the route.

The Seattle-Tokyo route was United`s first entry into Asia. The carrier spent 16 years seeking rights to enter Japan. In 1985, United bought an extensive Pacific route network from Pan American World Airways.

In hearings this year, United defended its position saying that it would be unfair to strip the airline of the route.

United officials said that the company spent years trying to acquire the route and millions of dollars developing it and that it had just begun making money on it.

United said it would have to cancel its Seattle-Hong Kong route if it lost the Tokyo route and transfer many of its 2,500 workers based at Seattle. American said if it was awarded the route, it would expand

``aggressively`` into Asian markets and was committed to building a hub at Seattle-Tacoma International Airport at a cost of $100 million to $150 million.

Continental Chairman Frank Lorenzo told Kolko that his airline was prepared to introduce ``vigorous`` price competition into the Pacific market if it was awarded the Seattle-Tokyo route including one-way fares as low as $299.